The fall in rupee against the dollar has had a negligible impact on demand as customers are still lining up to book holidays to travel abroad. Mahesh Iyer, MD & CEO, Thomas Cook, talks to Swaraj Baggonkar about the business outlook for Q4 and gains from Kumbh Mela.
What led to the 40% drop in net profit in the December quarter?
Our income from operations has grown by 7% year-on-year. In Q3FY24, there was a large business that had flowed in of Rs 93 crore comprising G20, Khelo India and National Games. There was no such business in Q3FY25. The bottom line impact of Rs 93 crore in Q3FY24 was Rs 6 crore. The other factor is the volatility in currency.
What were the other factors?
Currencies of Thailand, Malaysia and Indonesia have depreciated by 5-8% in a very short period and this did not give us enough time to react. Then there was the imaging business where we had a $1.6-million one-time, non-recurring receipt from the US government in Q3FY24.
What about the ongoing National Games in Uttarakhand?
We are executing the National Games in Uttarakhand, the value of which is roughly Rs 120 crore. This income will come in Q4. As you know the MICE business operates at margins of 6-7%, we will make 7-7.5%, which will go to the bottom line.
What has been the material impact of the currency depreciation? Has there been a dip in demand for overseas holiday?
There has been a negligible impact of the currency depreciation. If someone has to study abroad then that person will do it if the dollar was at Rs 50 or at Rs 80. Holidayers have not been deterred by the 15% rise in airfare and 25% rise in hotels.
Has Thomas Cook benefited from the Kumbh Mela?
We are expecting 2,500 people to go to the Kumbh Mela through Thomas Cook. While this might relatively look like a small number, but with each of them spending Rs 30,000 a night, and most spend two nights, the average spend per person is Rs 50,000. So, in total, we are looking at something like Rs 15-18 crore business from Kumbh Mela.
What is your business outlook for the current quarter?
We continue to see growth in double digits in the domestic business, which been the story for the whole of 2024. The long-haul side also is growing in double digit in terms of passengers and value. People are booking early to benefit from the currency.
Any new initiatives for this quarter or for FY26?
The foreign exchange business is a cash generator for us and now we are trying to diversify our portfolio on the prepaid card side. We operate variants for students and enterprises. We will do something for the leisure market by the end of Q4. Our customer age group has reduced to 25-35 year old from 45-year-old earlier.
What are your comments on Sterling Holidays having the strongest quarter ever?
We have had 18 quarters of profit at Sterling. This was possible due to property additions. We are currently at 57 resorts and 3,100 rooms, and an average room rate of Rs 6,200. The change in the model — time-share to resorts — did the magic.
Do you look to have any new brand addition to the hotel portfolio?
Our target is to move our current set of properties to 65 by FY26. Obviously, if there are good opportunities, we would like to look at it.